* Euro flat vs USD, off earlier 4-yr low; still below $1.20
* Euro zone debt, Hungary concerns spark retreat from risk
* Dlr, yen and Swiss franc gain on safety bids
(Updates prices, adds quote))
By Jessica Mortimer
LONDON, June 7 (Reuters) - The euro recovered on Monday from an earlier slide to a four-year low versus the dollar, but fiscal troubles in Hungary reminded investors of the scale of Europe's debt problems and weighed on the single currency.
After a drop of around 1.5 percent versus the dollar on Friday followed by more selling early on Monday, traders said investors were wary of pushing the single currency much lower, although sentiment remained negative.
Weaker-than-expected U.S. jobs data on Friday sparked concerns about global economic health, and Group of 20 finance ministers at the weekend highlighted the need to cut deficits as well as the need to safeguard a fragile recovery. [ID:nTOE65401K]
Concerns about public finances in Hungary -- a member of the European Union, though not the euro zone -- added to maket jitters after comments last week by government officials that Hungary could face a Greek-style crisis. [ID:nLDE6550I7]
Analysts said this reignited concerns about whether peripheral euro zone countries will be able to deliver tough austerity measures, and worries about European banks' exposure to Hungary.
"Euro/dollar is heading lower on a combination of the Hungary situation and the U.S. jobs data, though it's come an awfully long way in recent days and it won't head lower in a straight line," said RBS currency strategist Paul Robson.
At 1002 GMT, the euro EUR= was steady at $1.1974, having fallen as low as $1.1876 on the EBS trading platform, its lowest since March 2006.
Traders say the next option trigger is at $1.1850 and the likely target at $1.1825, the euro's March 2006 low. Below that, traders saw little support until its November 2005 low of $1.1638, though the euro's 1989 launch level of $1.1747 was also a potential key marker.
Data on Friday showed speculators cut net short positions on the euro in the week to June 1 to a still-high 93,325 contracts from 106,736. [IMM/FX] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic of European banks' exposure to Hungary click
For a graphic on CTFC futures positioning, click
The euro's weakness helped the U.S. dollar index .DXY earlier to a fresh 15-month high of 88.708, eyeing the 2009 high of 89.62, though it later pared gains to trade flat at 88.255.
The euro extended a slide begun on Friday, with market players saying its close below $1.2135, the 50 percent retracement of its 2000-2008 rally, was a bearish signal.
A lack of any expression of strong concern at a meeting of G20 finance ministers over the weekend or from euro zone policymakers after the euro's steep fall on Friday encouraged further euro selling, traders said. [ID:nSGE656024]
Data on Friday reinforced views the U.S. economic recovery may be slow [ID:nOAT004640], sparking a fresh bout of risk aversion which pushed European stocks .FTEU3 down on Monday and broadly benefited the yen, dollar and Swiss franc.
The euro fell 0.3 percent to 109.64 yen EURJPY=R, having earlier hit an 8-1/2-year low of 108.06 yen on EBS.
"The worries about Hungary came at a time when the market is really sensitive to any negative economic news and it has affected risk sentiment all over the world," said Elisabeth Andreew, currency strategist at Nordea in Copenhagen.
Concerns about Hungary's debt caused the cost of insuring against default in France and several peripheral euro zone sovereigns to rise on Monday. [GVD/EUR]
(Graphics by Scott Barber, additional reporting by Satomi Noguchi in Tokyo)